If you are one of those forward thinking people who incurred the time, effort, and expense of creating an estate plan that includes a California Trust (living Trust or revocable Trust–they’re the same thing), have you ever looked at it since its creation? Did you know that your estate plan can become less valuable and your Trust can become less Trust-worthy over time?
Like anything else, life brings changes. Changes in tax law, changes in California Trust law, changes in assets owned, changes in debts outstanding, and a whole host of family changes (birth, deaths, marriages, etc.). Most of these changes can have a substantial, and often negative, effect on your estate plan. While doing an estate plan is great, checking up on that plan to ensure everything is still going smoothly is key.
For example, whenever I create an estate plan that includes a Trust, my firm will assist the client in transferring assets to the Trust. Such as preparing a Deed to transfer real property in the name of the Trust. Yet, as life goes on, the client may sell the house that we transferred into the Trust and buy a new one, but forget to title the new property in the Trust’s name–a huge mistake. A Trust can only control assets titled in the name of the Trust. A Trust with no assets is no longer a valid Trust (in the legal field we call Trust assets “res” (latin for thing) or Trust corpus and a Trust cannot exist without res or corpus).
Or worse yet, a client refinances his or her home and the finance company pulls the property out of the Trust (this is common practice because lenders are wary of lending to Trusts). Once the refinance is complete, the house is never put back into the Trust–another big mistake.
Transferring real property back into a Trust is an easy thing to do–just requires a Deed–but failing to do it before the Trust creator (called the Settlor or Trustor) dies creates a huge problem that could result in substantial attorneys’ fees and costs.
This is just one example. The same applies to family changes, tax law changes and Trust law changes. So having your Trust and overall estate plan reviewed every two years or so is a very worthwhile activity. It will keep your estate plan on course and ensure that your plan is implemented when the time arrives.